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How to Steal a Diamond

In an arid region north of Cape Town, diamond theft is viewed as the proper work of man. This attitude extends across much of the southern part of Africa, draining profits and fueling political unrest.

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At a diamond cutter's in Johannesburg not long ago, a touch of the saw very nearly ruined an 8.5-carat stone. "It had a hole in one side and two gletzes on the other," said Derek Henderson, the beefy, laconic Englishman who runs the operation. A gletz is a visible flaw inside a diamond. Henderson gazed at the shattered gem as he continued: "We took a cut through the gletzes and had just started to polish off the hole when another gletz shot through the stone."

Henderson's cutters managed to salvage part of the diamond, keeping their
losses under $20,000. But sometimes a gem will burst into powder when a saw
hits the skin of a structural flaw—a flaw that may be invisible even through
the lens of an ordinary loupe. And that's not the only danger.

"I'd bought a blue, a good sky-blue," a well-known Johannesburg diamond dealer
told me. A blue is a "fancy," a category of nonwhite diamond; the more vivid
the color, the higher the price. "We started polishing, putting in facets.
Suddenly, as the cutter added a facet, the color changed from blue to light
blue—from two hundred and sixty thousand dollars a carat to forty thousand
dollars a carat." The dealer had been aiming for a four-carat finished stone:
in an instant $880,000 evaporated before his eyes. He was lucky, though. "When
we put in the next facet, the color jumped right back."

Like the stones themselves, the diamond trade is highly unpredictable. Gemstone
diamonds have no intrinsic value; their worth depends on the buyer's act of
faith. Keenly aware of this, the diamond world harbors a secret fear that the
trade itself might hit some hidden flaw and crumble. Still, so far so good.

Consider this: Two years ago a pair of South African adventurers retrieved a
23-carat intense-pink fancy from the bottom of the Chicapa River, in Angola.
They sold it at the diamond bourse in Johannesburg for $4.4 million. The buyers
polished it into a 10-carat gem. They reportedly sold it for $9 million to
middlemen, who are said to have sold it in turn to the Sultan of Brunei's
brother for $20 million—this for a stone the size of a raisin.

Most diamonds come from big recovery plants—places fortified with razor wire,
alive with arms, popping with the mechanized jets of air that blast the gems
from streams of gravel rattling through the plants. Security is a ceaseless
preoccupation: the global output of "rough," as uncut diamonds are called, is
worth about $7 billion a year, and "leakage," or theft from the mining process,
is relentless. Perhaps this is inevitable—after all, General Motors doesn't
have to worry that workers on the production line are swallowing doors, but a
10-carat stone goes down like a pea.

As a result, the diamond trade is awash in contraband. Hundreds of millions of
dollars' worth of smuggled diamonds leave Angola every year. Bootlegged goods
poured out of Russia, too, until 1997, when De Beers, the world's largest
diamond-mining company, forged an agreement whereby Russia sells at least half
its production to the London-based Central Selling Organization—some $550
million worth of rough each year. The Russians keep the rest for domestic
polishing; naturally, some of this joins the sea of smuggled gems.

Less well known to the outside world, but infamous in the trade, is the steady
flow of stolen diamonds from Namaqualand, a sandy slab of South Africa along
the Atlantic coast. Namaqualand's pan-hot desert and scraped little hills start
north of Cape Town and run up to the Orange River, which forms the Namibian
border. The ocean breaks on a forbidding shore. Not much happens in
Namaqualand—except for the stealing of diamonds. In Namaqualand, stealing
diamonds is the proper work of man.

"God put the diamonds here," says Frikkie Mostert, "and He put nothing else.
People here think the diamonds belong to them." Mostert runs a diamond-recovery
plant in the village of Port Nolloth for the South African company Trans Hex
Group. Port Nolloth is on the Diamond Coast, a four-hundred-mile stretch of
beach that begins at the Olifants River and extends into Namibia. If anyone is
going to be strapping stolen diamonds to homing pigeons, or pressing them under
his fingernails, or strolling through the sorting house in boots whose soles
have been impregnated with adhesive, the Diamond Coast is a good place to find
him.

Diamonds arrived in Namaqualand millions of years ago, tumbling down the rivers
and into the sea. When the ocean receded, some of the diamonds remained on the
beach. Others are embedded in gravel on the ocean floor. In short, a great
swath of diamonds lies along the coast, and millions of dollars a year pour
into the efforts to retrieve them. The area, land and sea, is a grid of mining
concessions. At Kleinsee, where the Buffels River meets the ocean, De Beers
strips the shore. Alexkor, South Africa's state-owned mine, controls the beach
to the north and maintains a flotilla of inshore diamond boats. Ten miles
inland Trans Hex combs a long-buried former bed of the Orange River. But across
the river, in the southwest corner of Namibia, is the real prize—a
10,140-square-mile tract of land identified on maps as Diamond Area 1. It was
once the richest diamond ground on earth and still produces an abundance of
high-quality stones. Mining rights to the area belong to Namdeb, a consortium
of De Beers and the Namibian government. Namdeb holds a special place in the
hearts of those who live in Namaqualand, whose arid landscape it helps to water
with the only rain that counts there—stolen diamonds.

Beach mines are a thief's delight. In open pits, by contrast, workers rarely
come face-to-face with diamonds: heavy equipment scoops out the ore and feeds
it to the plant. But on the beach, diamonds sit on the old seabed. Miners strip
away the "overburden," non-diamond-bearing sand and gravel, and sweep the
bedrock for gems. Until recently they did the sweeping with whisks. Now Namdeb
uses huge vacuum machines instead, to make it more difficult for miners to come
into direct contact with diamonds. In addition, the mines offer a bounty for
every loose stone turned in. So do illicit diamond buyers in Port Nolloth.

Let's say a miner spots a diamond. He may glance around to make sure that
security guards are looking the other way, and press the diamond under his
fingernail for later transfer to another receptacle, such as his mouth. In the
event that members of the security force have been corrupted (always a
possibility), he needn't be that careful. The next step is to get the diamond
out of the mining area. In one scheme workers smuggle trussed homing pigeons
out to the mining areas in lunch boxes. They fit the birds with harnesses, load
them with rough, and set them free. Sometimes the thieves are too ambitious.
Security officials at Namdeb caught one thief when they found his pigeon
dragging itself along the ground, its harness loaded beyond takeoff capacity.

Another time a thief smuggled in the pieces of a crossbow, later sending a
volley of hollow bolts freighted with diamonds arcing over the fence, for
retrieval by a confederate. This scheme ended when an unlucky shot fell to
earth in front of a security jeep. Diamonds are dropped into the gas tanks of
machinery leaving the beach, and inserted into razor cuts in tires;
collaborators remove them later. Miners wedge diamonds behind sweatbands, tap
them into ears, and insert them in other orifices. At one De Beers mine,
security guards caught a thief only because he'd inserted so many gems into his
rectum that he was waddling. Diamonds fluoresce under x-rays, and Namdeb uses
x-ray scanners on employees leaving the mining area. But as miners well know,
the cumulative health hazards posed by x-rays dictate random use. The scanner
always makes a noise, but it is not always taking an x-ray. So the miners take
their chances, and diamonds slip through.

A good number of the diamonds filched from Alexkor and Namdeb find their way down the coast to Port Nolloth, a hamlet with few visible means of support
but with a flourishing population of BMWs. At the north end of town stands a
cluster of neat concrete villas, painted ocher or white. Each has a shiny
German car or two parked out front. It is common knowledge in the area that
illicit diamonds paid for some of these villas. The south end of town is marked
by the pier that serves Trans Hex's tiny recovery plant—Frikkie Mostert's
plant. The municipal dock nearby makes a stubby L. A small fleet of forty-foot
fiberglass boats, called tupperwares, bobs in the shelter of the reef. Most are
independently owned, and contract their services to diamond companies.

On the rare days when the wind subsides, crews and divers pile aboard and the
tupperwares go rolling out to sea, trailing suction hoses. Reaching their
inshore concessions, the boats toss on the swell; divers splash into the frigid
water. At a depth of a hundred feet they wrestle steel nozzles into the muck.
Larger ships work farther out. Indifferent to the heavy seas, remote-controlled
tractors lowered from these ships creep along the ocean floor, harvesting
gravel.

Although the fleets contribute stolen rough, Port Nolloth really lives off
booty from the beach digs of Alexkor and Namdeb. The industry knows this; the
South African police know it. Mostly they live with it, having little choice.

Consider the last raid on the town, four years ago. With a ferocity born of
frustration, officers from the diamond branch of the police pounced on Port
Nolloth. They focused on the town's Portuguese, who had fled Angola in 1975, at
the end of Portuguese rule, and are thought to be particularly active in the
illicit diamond trade.

On the day of the raid the diamond branch gathered its forces near Kleinsee.
Vehicles full of heavily armed police officers sped north. A helicopter
clattered into the air. They all headed for the Portuguese country club, south
of Port Nolloth. The club is surrounded by a wall topped with razor wire. The
helicopter racketed over the wall and hovered. Combat officers slid down ropes
into the green oasis of the grounds and charged the clubhouse.

"They had food," says Derrick Clampett, a seasoned diamond detective who
participated in the raid. "They had booze. They were ready for a party. The
diamond scales were all set up, there were loupes—the whole business. But
there weren't any diamonds. We were a day early. Later we raided a house and
found $250,000 in cash."

"Yes," adds Koos Jooste, who heads the diamond branch's Cape Town detachment,
"but the possession of money is not illegal in South Africa."

The beaches of Alexkor, the South African state mine, begin only a few
miles north of Port Nolloth. By the company's own admission, the mine leaks as
much as 30 percent of its goods, amounting to some $15 million worth of
diamonds every year—most of it making its way to Port Nolloth. Newspaper
reports assert that the losses may in fact be as high as 45 percent. Still,
Alexkor is something of a sideshow; for thieves on the Diamond Coast, Namdeb is
the main event.

Every year giant bucket-wheel excavators scoop some 33 million tons of
overburden from the beach, adding it to the neat range of hills that Namdeb has
created along the coast. Every year some 26 million tons of ore, buried eons
ago, is dredged up and returned to the light of day. Namdeb feeds the ore to
its mill, which crushes, sifts, and washes it, leaving a gravel concentrate.
The concentrate is fed onto conveyor belts and bombarded with x-rays; when the
fluorescence that indicates the presence of a diamond is detected, jets of air
knock the diamond free.

Namdeb's biggest security problem comes from a historical anomaly—the
construction of miners' hostels inside the part of the mine site that includes
the high-grade beach. A large population of single men with lots of spare time
to think up ways to steal diamonds thus permanently occupies the most sensitive
area of a famously rich mine. Miners with luggage pass in and out at will.
Criminal syndicates, active at mines throughout the region, conduct a brisk
bourse inside Namdeb's hostels. Miners receive anywhere from 60 to 80 percent
of a diamond's value, adding the sum to their $350-a-month wage. Nor is money
the only incentive. Coercion is ubiquitous. "The diamond industry has tended to
attract all kinds of unsavory characters, not just to steal but to intimidate
people, to introduce a general criminal atmosphere," says Sir Alan Grose, the
chief of security for De Beers. "Once that gets in place, it's very hard to
eliminate."

Reluctant to offend the Namibian government, Namdeb will not raid the hostels.
Political delicacy has also precluded simply closing them: the former
guerrillas believed to operate the Namdeb syndicates are veterans of the same
organization that now constitutes Namibia's ruling party.

A few years ago Namdeb's beleaguered security force tried a different tack.
"They decided to raid the buses," a former De Beers mine executive told me,
referring to the vehicles in which miners travel to and from the beach. "The
thinking was, if we can't do anything about the hostels, let's stop the buses
on the way back. So without warning, security stopped the buses. They didn't
find a thing. But a hundred yards back all these tiny parcels littered the
road. The miners had chucked them out. Even though the roadblock had been a
last-minute operation, word had gotten to the buses in time. That's how
completely the syndicates have penetrated security."

De Beers is always trying to improve security, and has developed a low-dose
x-ray, called Scannex, a version of which is now being tested at Cape Town's
Groote Schuur hospital. If the tests indicate that the dose is safe for daily
use, Scannex could close the loophole of random scanning. But the problem of
corrupt security is likely to remain. The only real solution would appear to be
the removal of the hostels. Unless that happens, Namdeb will stay porous.

"I wouldn't want to put a percentage on our production that goes missing," Sir
Alan told me a year ago, "but the larger of the figures you just mentioned is
in the ballpark." That figure was 15 percent, the high end of a conservative
estimate I'd heard. I had in mind a higher figure. "They'll tell you fifteen
percent, but it's more like thirty," a former De Beers executive had warned me.
When I tried this higher figure out on Sir Alan, he fixed me with a serene
gaze. "I don't think it's ever been much more than thirty percent,
honestly."

In 1997, for example, Namdeb collected 786,000 carats from the beach. Offshore
its fleet scoured the seabed for another 485,000. Inshore a few tupperwares on
commission brought in 135,000 carats more. At, say, $270 a carat (an insider's
estimate of Namdeb's price for rough), the reported production adds up to some
$380 million. If workers are stealing 30 percent—in other words, if the $380
million represents only 70 percent of Namdeb's real output—then thieves are
skimming off some $160 million a year.

The boundaries of Diamond Area 1 exactly match those of the old
Sperrgebiet, the "forbidden territory" proclaimed by Namibia's German
colonial masters in 1908, after a railway laborer shoveling sand from the
tracks stumbled across a diamond. South Africa seized Namibia in 1915.
Seventy-five years later the Namibians ousted the South Africans. Four years
after that, in 1994, Namdeb was formed. Through it all the borders of the
Sperrgebiet have remained unchanged. The enduring sovereignty is the
sovereignty of diamonds.

In the diamond trade there are effectively no states. Borders are unable to
control the flow of goods. Take Botswana, considered a model of civic decorum,
with a reputation for husbanding its diamond revenues to improve the conditions
of its people. The Jwaneng mine, a joint venture of De Beers and the Botswana
government, produces 12 million carats a year. A game park teeming with zebras
surrounds the mine, and the nearby village where the miners and their families
live is a little Eden, profoundly unlike the calamitous, violent world of
neighboring South Africa. Yet miners steal diamonds here, too; a De Beers
executive in the capital, Gaborone, told me that South African syndicates have
moved in.

South Africa, of course, has added its own special acid to the corrosion of
frontiers. During the country's long civil war the army and the African
National Congress thrust back and forth across the region's borders, helping to
spread economic mayhem throughout the southern part of the continent. The white
government in Pretoria is reported to have authorized military intelligence to
engage in the illicit diamond trade, further entrenching the activity.

Diamonds have also fed Angola's long civil war—a war that ended with a peace
accord in 1994, but only on paper. The war was reignited late last year by a
bloody series of rebel attacks, including one on a remote diamond mine owned by
a Vancouver-based company, some of whose directors had clear ties to
mercenaries who have acted against the rebels. There are two principal warring
factions: the Popular Movement for the Liberation of Angola (MPLA), headed by
José Eduardo dos Santos, the country's President, and the Union for the
Total Independence of Angola (UNITA), under Jonas Savimbi. The MPLA, which has
enjoyed international recognition since 1976, holds the capital, Luanda, and in
recent years extended its military reach into regions once controlled by UNITA.
In spite of commitments made in 1994, UNITA has refused to relinquish the
diamond-rich Cuango Valley and the provinces of Lunda Norte and Lunda Sul, each
with valuable diamond fields. The rebels are funded, after all, by the only
available asset that meets the dual requirements of portability and easy
conversion into cash—diamonds.

"The government has oil, Savimbi has diamonds," says Edgar J. Dosman, a Senior
Research Fellow at the Centre for International and Security Studies at York
University, in Toronto. In 1996 alone Savimbi ran $700 million in rough out of
Angola. Clearly, UNITA cannot afford to abandon the diamond regions.

The government reaps its share of diamonds too. Ministers openly take positions
in diamond-mining joint ventures. Elsewhere a joint-venture partner would
furnish money or expertise; in Angola he simply arranges permission to mine.

Next door, in the Democratic Republic of the Congo (formerly Zaire), the new
President, Laurent Kabila, now battling insurgents, is believed to have funded
his own insurgency partly by selling diamond and other mineral rights. The
ruler ousted by Kabila, Mobutu Sese Seko, maintained an alliance with Savimbi;
Kabila's is with the MPLA. The long-term effects of these shifts in power and
allegiance remain to be seen.

Helicoptering up Angola's Chicapa River, I could see the vivid scars of illegal
digs—illegal in the eyes of the government, perhaps, but "licensed" by whoever
had happened to control the area at the time. The specter rises of a medieval
land, a dominion of barons perversely devoted to the sacking of their own
domains. In this model the lonely monarch is De Beers, fighting an endless
battle for order, at tremendous cost. In a practice known as "mopping up," the
company has often tried to buy as many illicit diamonds as it could; the gems,
if allowed to flood the open market, could send prices plummeting virtually
overnight. Not long ago, De Beers was spending $15 million a week mopping up
Angolan diamonds alone.

One winter morning, in the hard sunlight of Namaqualand, I stood staring down
into a pit whose dimensions were roughly those of a twenty-story building
covering three football fields. It was part of the Trans Hex Baken mine, which
produces diamonds worth, on average, $500 a carat. It is hard to find better
goods than these. At the bottom of this hole, dug from gravel laid down over 15
million years, is a former riverbed. Sometimes Trans Hex locates the plunge
basin of a prehistoric waterfall, where handfuls of diamonds may have
accumulated. Recovering them involves a lot of digging: Trans Hex estimates
that two truckloads of dirt are removed for every carat that makes its way out
of the pit and onto someone's finger.

Across the Orange River morning dumped its bin of light onto Diamond Area 1. I
could almost hear the pigeons stirring. Probably the first few stones of the
day were already slipping past the fence. And down on the Diamond Coast, in
Port Nolloth, someone would be turning the ignition key in his BMW, tossing his
loupe onto the dash, and heading off to work.

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